This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Onyx: Don't Hold Your Breath for $180/Share

NEW YORK ( TheStreet) -- A combination of takeover speculation and short covering is once again lifting shares in Onyx Pharmaceuticals (ONXX), recently by 2%, Tuesday. On Monday, Onyx shareholders enjoyed the largest one-day increase in shares after soaring over $40 (50%) above Friday's close.

Amgen's (AMGN) unsolicited $10 billion ($120 per share) proposal to acquire Onyx was rejected before the opening on Monday. It didn't take long for Onyx CEO Anthony Coles and the board to take a pass on Amgen's offer.

The quick rejection doesn't indicate the company isn't for sale; it certainly is based on the company's previous comments. The question isn't if, but at what price.

Obviously, Cole believes Onyx is worth much more than $120 -- but can he get it? The answer is yes, but how much more depends on the feasibility of slicing up parts and selling each component to the highest bidder. Think of it as a car that is worth more in parts to various buyers instead of selling the car complete.

While the major pharmaceuticals I follow are currently generating strong cash flow and profits, they also face a patent revenue cliff. I wrote on Monday the usual suspects for an Onyx takeover include Pfizer (PFE), Bristol-Myers Squibb (BMY), Novartis (NVS), or Merck (MRK).

Other companies may have an interest in various parts, but the company to watch is still Amgen. Amgen shareholders haven't enjoyed the takeover news and rejection in the slightest. While the overall market is trading higher, Amgen's shares are down about 2%. Other strong suitors are lower in the wake of takeover speculation, too. Pfizer and Bristol-Myers are trading lower for the second day, and Merck is treading water.

We can ascertain from pharmaceutical space weakness that the market isn't viewing a buyout favorably from the buyer's point of view. Sanford C. Bernstein biotechnology analyst Geoffrey Porges suggests a takeover price north of $170 is possible using the above-described multiple-buyer parceling out of the company.

It appears the most likely way Onyx will receive over $150 requires multiple buyers. For shareholders willing to sit on their hands for months, it may pay off handsomely.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ONXX $0.00 0.00%
AAPL $94.27 0.00%
FB $101.00 0.00%
GOOG $684.12 0.00%
TSLA $149.50 4.10%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs